Justice minister Mark Golding said the cabinet is backing a proposal to make possession of no more than 2oz of marijuana a petty offence that could result in a fine, but not a criminal arrest.
Mr Golding said possession for religious purposes will also be allowed under the proposals.
Followers of the Rastafari spiritual movement smoke cannabis which they consider a sacrament.
Mr Golding said legislation would be drafted to provide a path for people to get criminal records expunged if they have been convicted under the current law for smoking cannabis.
Cannabis possession for medical and scientific research will also be permitted for some.